PUTRAJAYA: The Federal Court today dismissed an appeal by the government and the Public Service Department (PSD) director-general against a Court of Appeal decision to declare an amended pension law null and void.
A five-member panel chaired by Court of Appeal president Tan Sri Abang Iskandar Abang Hashim ruled that both appellants' appeals had no merit.
Chief Judge of Malaya Datuk Mohamad Zabidin Mohd Diah when reading the unanimous decision, said the amendments made to Section 3 and 7 of the Pensions Adjustment (Amendment) Act (PAA) 2013 would be less beneficial to the respondent.
"Under the old scheme, the amount of pensions receivable by a pensioner would correspondingly increase whenever there is a salary revision for public officer, provided the pensioner and public officer are of the same grade.
"After going through the submissions by both parties, with respect, we are not persuaded by the appellants' submission.
"The amended section 3(2) of the PAA 1980 does not ensure that Article 147 of the Federal Constitution is not contravened," he said.
He said the court is of the considered view that the amendments to Sections 3 and 6 of the PAA 1980 had resulted in a less favourable situation to the respondents and thus contravened Article 147 of the Federal Constitution.
Article 147 protects pensions, gratuities and other allowances for members of the public service, their widows, children, dependants or personal representatives.
Aminah Ahmad, who retired as a civil servant with the Foreign Affairs Ministry, sued in her personal capacity and on behalf of 56 retired members of the public service, claiming that the amendments to the Pensions Adjustment Act resulted in a situation "less favourable" to her as compared with the preceding retirement adjustment scheme under the Pensions Adjustment Act 1980.
Under the old scheme, a retiree's pension is revised based on the prevailing salary of incumbent civil servants in that grade. However, the 2013 amendment was introduced based on a flat rate of 2 per cent annual increment.
On Jan 13 last year, the Court of Appeal ruled in favour of Aminah and granted a declaration that the amendments to sections 3 and 7 to the Pensions Adjustment (Amendment) Act 2013, which came into effect from January 2013, were null and void as they contravened Article 147 of the Federal Constitution.
The appellate court held that with the declarations, the situation prevailing before the amendment to Section 3 of the Pensions Adjustment Act 1980 will be revived and continue to apply.